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1 THE ANTECEDENTS OF CUSTOMER RELATIONSHIP MANAGEMENT AND ITS IMPACT ON HOTELS PERFORMANCE IN JORDAN SULTAN MAHMOUD ALSHOURAH DOCTOR OF PHILOSOPHY UNIVERSITI UTARA MALAYSIA MAY 2012

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Page 1: SULTAN MAHMOUD ALSHOURAH - etd.uum.edu.my · Dekad lalu menyaksikan kemunculan Pengurusan Perhubungan Pelanggan (PPP)sebagai satu teknik yang mendasari penambahbaikan dalam prestasi

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THE ANTECEDENTS OF CUSTOMER RELATIONSHIP

MANAGEMENT AND ITS IMPACT ON HOTELS

PERFORMANCE IN JORDAN

SULTAN MAHMOUD ALSHOURAH

DOCTOR OF PHILOSOPHY

UNIVERSITI UTARA MALAYSIA

MAY 2012

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THE ANTECEDENTS OF CUSTOMER RELATIONSHIP MANAGEMENT

AND ITS IMPACT ON HOTELS PERFORMANCE IN JORDAN

BY

SULTAN MAHMOUD ALSHOURAH

Thesis Submitted to

Othman Yeop Abdullah Graduate School of Business,

Universiti Utara Malaysia,

in Fulfillment of the Requirements for the Degree of Doctor of Philosophy

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PERMISSION TO USE

In presenting this thesis in fulfillment of the requirements for a postgraduatedegree

from Universiti Utara Malaysia, I agree that the University Library make a freely

availablefor inspection. I further agree that permission for copying of this thesis in

anymanner, in whole or in part, for scholarly purpose may be granted by my

supervisoror, in her absence by the Dean of Othman Yeop Abdullah Graduate School

of Business. It is understoodthat any copying or publication or use of this thesis or

parts thereof for financial gainshall not be given to me and to Universiti Utara

Malaysia for any scholarly use which may bemade of any material from my thesis.

Request for permission to copy or make other use of materials in this thesis, in

wholeor in part should be addressed to:

Dean of Othman Yeop Abdullah Graduate School of Business

Universiti Utara Malaysia

06010 UUM Sintok

Kedah Darul Aman

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ABSTRACT

The last decade has seen the emergence of Customer Relationship Management

(CRM) as a technique to underpin organizational performance improvement in

improving customer retention, customer satisfaction, and customer value. However,

evidence suggests that many CRM initiatives fail to achieve desired results.

Furthermore, empirical research is still scarce.In recent years, CRM has been the

favored theme for numerous studies and reports. It has also been considered as a way

of capturing comparative advantages in the face of the growing competition.

However, despite many studies conducted on CRM in various industries in the past

20 years, there is still significant disagreement about its definition and meaning, and

the framework for the effective implementation and evaluation of CRM practice.

Moreover, there is a lack of systematic empirical evidence regarding the success

factors of the CRM performance, and its impact on organizational performance. To

address these issues, this study examines the degree of CRM performance of hoteliers

as well as the relationship between CRM performance and organizational

performance. Furthermore, this research also investigated the influence of

organizational and technological factors on CRM performance. In this quantitative

study, a total of 98 Jordanian hotels participated by voluntarily completing the survey

questionnaire, constituting an overall 49% response rate. From the analysis

undertaken, it was found that the CRM performance of the respondents were at

moderate degree. The research results indicated that CRM performance has a positive

influence on organizational performance. Four major factors were found to have

significant influence on CRM performance namely top management, customer data,

customer information processing, and CRM functionality. On the other hand, factors

such as customer orientation, training orientation, and data integration were not

significantly related to CRM performance. Theoretical implications and managerial

implications of these findings are discussed.

Keywords: Customer Relationship Management, Organizational Performance, Data

Integration, Customer Orientation, Training Orientation.

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ABSTRAK

Dekad lalu menyaksikan kemunculan Pengurusan Perhubungan Pelanggan

(PPP)sebagai satu teknik yang mendasari penambahbaikan dalam prestasi organisasi

bagi meningkatkan pengekalan pelanggan, kepuasan pelanggan, dan nilai pelanggan.

Bagaimanapun, bukti menunjukkan bahawa banyak inisiatif PPP gagal mencapai

sasarannya. Tambahan pula, kajian empiris masih kurang. Semenjak kebelakangan

ini, PPP semakin menjadi topik yang menarik perhatian banyak kajian dan laporan.

Ia juga dianggap sebagai satu cara untuk memperoleh kelebihan bersaing dalam

konteks persaingan yang semakin sengit. Walaupun banyak kajian tentang PPP di

pelbagai industri telah dijalankan semenjak 20 tahun lalu, masih terdapat

percanggahan ketara tentang definisi, maksud dan kerangka untuk melaksanakan dan

menilai PPP secara berkesan. Selain itu, bukti empiris yang sistematik tentang faktor

kejayaan PPP, dan kesannya terhadap prestasi organisasi masih kurang. Bagi

menangani isu ini, kajian ini mengkaji darjah prestasi PPP di kalangan pengusaha

hotel, dan perkaitan di antara prestasi PPP dan prestasi organisasi. Di samping itu,

kajian ini juga menyiasat pengaruh faktor organisasi dan teknologi terhadap prestasi

PPP. Sebanyak 98 buah hotel di Jordan telah melibatkan diri dalam kajian kuantitatif

ini dengan mengisi borang soal selidik secara suka rela, menghasilkan kadar

maklumbalas sebanyak 49%. Daripada analisis yang dijalankan, didapati bahawa

darjah PPP di kalangan responden adalah sederhana. Hasil kajian menunjukkan

bahawa prestasiPPP mempunyai pengaruh positif terhadap prestasi organisasi. Empat

faktor utama didapati mempunyai pengaruh yang signifikan terhadap prestasi PPP

iaitu pengurusan atasan, data pelanggan, pemprosesan maklumat pelanggan, dan

fungsiPPP. Sebaliknya, faktor seperti orientasi pelanggan, orientasi latihan dan

integrasi data tidak berhubungan secara signifikan dengan prestasi PPP. Implikasi

teori dan pengurusan yang terhasil daripada dapatan ini turut dibincang.

Kata Kunci: Pengurusan Perhubungan Pelanggan, Prestasi Organisasi, Integrasi

Data, Orientasi Pelanggan, Orientasi Pelanggan.

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AKNOWLEDGEMENTS

All praises go to Allah, the Most Gracious and the Most Merciful. I thank you. May

peace and blessings of Allah be upon our Prophet Muhammad (SAW), and his family

and companions.

First and foremost, my utmost gratitude goes to my supervisor, Assoc. Prof.

Dr.Nor AzilaMohd Noor. She has patiently guided me throughout the duration of

preparing this thesis. I am deeply indebted to Assoc. Prof. Dr. Nor AzilaMohd Noor

who has given me her valuable ideas, insights, comments and suggestions towards

understanding the empirical predicaments I have gone through.

My deep appreciation goes to my parent: My father “Al-hajj Abu Sultan “and

to my mother “Om Sultan” for their thoughts and prayers and for their endless love

and devotion.My never-ending gratitude to my lovely wife (Manal Ata Altawalbeh),

for assisting me in every way. She is great inspiration to me. Hence, great

appreciation and enormous to her, for without her understanding and helping, I am

sure this thesis would never have been completed. To my daughters, Ghufran and

Jana, thank you very much for providing me with overwhelming patience, support

encouragement and inspiration.

Finally, to my father in law “Al-hajj Abu Mohammad” and my mother in law

“Om Mohammad” and their family, to my brothers “Mamdoh, Hamzah and Belal“, to

my beloved sisters and their families, and also to all my Uncles and their families,

thank you very much for given undivided support and eternal prayers for me always.

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TABLE OF CONTENTS

Title Page

PERMISSION TO USE……………………………………………………… i

ABSTRACT …………………………………………………………………. ii

ABSTRAK …………………………………………………………………... iii

AKNOWLEDGEMENTS………………………………………………….. iv

TABLE OF CONTENTS…………………………………………………… v

LIST OF TABLES………………………………………………………….. xii

LIST OF FIGURE………………………………………………………….. xiv

LIST OF APPENDICES……………………………………………………. xv

LIST OF ABBREVIATIONS….…………………………………………… xvi

CHAPTER ONE: INTRODUCTION

1.1 Introduction…………………………………………………………… 1

1.2 Background of the Study……………………………………………. 1

1.3 Problem Statement…………………………………………………… 6

1.4 Research Questions……………………………………………………. 11

1.5 Research Objectives…………………………………………………... 11

1.6 Significance of the Study……………………………………………. 12

1.7 Scope of Study……………………………………………………….. 15

1.8 Organization of Thesis………………………………………………… 16

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CHAPTER TWO: LITERATURE REVIEW

2.1 Introduction…………………………………………………………… 18

2.2 Relationship Marketing……………………………………………… 18

2.3 Customer Relationship Management (CRM)………………………… 21

2.4 CRM Definition………………………………………………………. 24

2.5 Benefits of CRM……………………………………………………… 27

2.6 CRM Implementation………………………………………………… 30

2.7 Future of CRM……………………………………………………….. 32

2.8 Fundamentals Characteristics of CRM……………………………….. 33

2.8.1 Sales Force Automation (SFA)…………………………… 34

2.8.2 Customer Service (CS)……………………………………. 35

2.8.3 Marketing Automation (MA)………………………. ……. 36

2.8.4 Field Service (FS)…………………………………………. 37

2.9 History of CRM………………………………………………………. 38

2.10 CRM in the Hospitality Industry……………………………………… 39

2.10.1 The Opportunity…………………………………………… 40

2.10.2 The Challenge……………………………………………… 41

2.11 CRM Failure………………………………………………………….. 43

2.12 CRM Tools……………………………………………………………. 45

2.12.1 Mobile CRM……………………………………………….. 46

2.12.2 E-CRM…………………………………………………… 47

2.12.3 CRM Software……………………………………………. 48

2.12.4 Call Centers……………………………………………….. 50

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2.12.5 Customer Service…………………………………………... 51

2.12.6 Sales Force………………………………………………… 52

2.12.7 A voice Response System…………………………………. 53

2.12.8 Point of Sale Terminals…………………………………… 53

2.12.9 The Loyalty Cards…………………………………………. 55

2.12.10 Phone Contact……………………………………………… 56

2.13 CRM Performance……………………………………………………. 57

2.13.1 Key Customer Focus………………………………………. 63

2.13.1.1 Customer-centric Marketing………………….. 63

2.13.1.2 Key Customer Lifetime Value Identification…. 64

2.13.1.3 Personalization………………………………… 64

2.13.1.4 Interactive Co-creation Marketing……………. 65

2.13.2 CRM Organization………………………………………… 65

2.13.3 Knowledge-Based CRM…………………………………… 67

2.13.3.1 Knowledge Learning and Generation…………. 67

2.13.3.2 Knowledge Dissemination and Sharing………. 67

2.13.3.3 Knowledge Responsiveness………………….. 68

2.13.3.4 Types of Customer Information………………. 68

2.13.4 Technology-Based CRM…………………………………... 69

2.14 Antecedents of CRM Performance…………………………………… 71

2.14.1 Organizational Factors……………………………………... 76

2.14.1.1 Top Management……………………………… 78

2.14.1.2 Customer Orientation…………………………. 83

2.14.1.3 Training Orientation…………………………... 87

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2.14.2 Technology Factors………………………………………... 92

2.14.2.1 Customer Data………………………………… 94

2.14.2.2 Customer-Information Processing…………….. 100

2.14.2.3 Integration of CRM…………………………… 105

2.15 Consequences of CRM Performance…………………………………. 110

2.16 Theoretical Framework ………………………………………………. 121

2.17 Hypotheses…………………………………………………………… 127

2.18 Chapter Summary……………………………………………………..

135

CHAPTER THREE: METHODOLOGY

3.1 Introduction…………………………………………………………… 137

3.2 Research Design……………………………………………………… 137

3.3 Operational Definition of Variables…………………………………... 138

3.4 Questionnaire Design (Measurement)………………………………... 143

3.4.1 Organizational Performance……………………………….. 143

3.4.2 CRM Performance…………………………………………. 144

3.4.2.1 Key Customer Focus……………………………. 145

3.4.2.2 CRM Organization……………………………… 146

3.4.2.3 Knowledge Management……………………….. 147

3.4.2.4 Technology-based CRM………………………... 148

3.4.3 Top Management…………………………………………... 149

3.4.4 Customer Orientation……………………………………… 150

3.4.5 Training Orientation……………………………………….. 151

3.4.6 Customer Data……………………………………………... 152

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3.4.7 Customer-Information Processing…………………………. 153

3.4.8 Integration of CRM………………………………………... 154

3.4.9 Profile of the Hotels………………………………………... 156

3.4.10 Reasons of not Using CRM………………………………... 156

3.4.11 CRM Tools………………………………………………… 157

3.5 Study Population and Sample………………………………………… 158

3.6 Data Collection Procedure……………………………………………. 160

3.7 Pilot Study…………………………………………………………….. 162

3.8 Data Analysis…………………………………………………………. 163

3.8.1 Factor and Reliability Analyses…………………………… 164

3.8.2 Descriptive Statistics……………………………………… 166

3.8.3 Test of Differences………………………………………... 166

3.8.4 Correlation Analysis……………………………………….. 166

3.8.5 Multiple Regressions………………………………………. 167

3.8.6 Multicollinearity Diagnostics……………………………… 168

3.9 Chapter Summary…………………………………………………… 169

CHAPTER FOUR : DATA ANALYSIS AND FINDINGS

4.1 Introduction…………………………………………………………… 170

4.2 Response Rate………………………………………………………… 170

4.3 Profile of the Hotels…………………………………………………... 171

4.4 Reasons of not Using CRM………………………………………….. 172

4.5 CRM Tools……………………………………………………………. 173

4.6 Goodness of Measures………………………………………………... 176

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4.6.1 Construct Validity…………………………………………. 176

4.6.2 Result of Exploratory Factor Analysis…………………….. 177

4.6.2.1 Organizational Performance……………………. 177

4.6.2.2 CRM Performance……………………………… 178

4.6.2.3 Factor Analysis on Organizational Factors……... 181

4.6.2.4 Factor Analysis on Technology Factors…….….. 185

4.6.3 Reliability Analysis………………………………………... 190

4.7 Descriptive Analysis………………………………………………….. 191

4.7.1 Major Variable……………………………………………... 191

4.7.2 Degree of CRM Performance as Perceived by Hoteliers in

Jordan

192

4.8 Correlation Analysis………………………………………………….. 194

4.9 Hypotheses Amendments……………………………………………... 195

4.10 Regressions…………………………………………………………… 196

4.10.1 Multiple Regression Analysis on Factors that Influence

CRM Performance

197

4.10.2 Regression Analysis on CRM Performance and

Organizational Performance

200

4.11 Chapter Findings…........……………………………………………… 201

4.12 Chapter Summary……………………………………………………..

202

CHAPTER FIVE: DISCUSSION AND CONCLUSIONS

5.1 Introduction…………………………………………………………… 203

5.2 Recapitulation of the Study Findings……….………………………… 203

5.3 Discussions……………………………………………………………. 204

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5.3.1 Degree of Customer Relationship Management

Performance in Jordanian Hotel Industry

204

5.3.2 The Influence of Customer Relationship Management

Performance on Organizational Performance

208

5.3.3 The Effects of Antecedent Factors on Customer

Relationship Management Performance

211

5.3.3.1 Organizational Factors………………………… 212

a. Top Management…………………………… 212

b. Customer Orientation………………………. 214

c. Employee Training…………………………. 216

5.3.3.2 Technology Factors…………………………… 218

a. b. c. a. Customer Data……………………………… 218

d. e. f. b. Customer Information Processing…………. 220

g. h. i. c. CRM Functionality…………………….….. 222

j. k. l. d. Data Integration…………………………… 224

5.4 Theoretical Contribution……………………………………………... 226

5.5 Methodological Contribution………………………………………… 229

5.6 Managerial Implications……………………………………………… 230

5.7 Limitations and Future Research Directions…………………………. 234

5.8 Conclusions…………………………………………………………… 236

REFERENCES……………………………………………………… 240

APPENDICES……………………………………………………… 258

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LIST OF TABLES

Table No. Title of Table Page

Table 2.1 The Most Important Barriers of CRM Identified in Previous

Studies

45

Table 2.2 Weaknesses and Strengths of CRM Software Types 49

Table 2.3 Past Studies on the Relationships between CRM Performance

and Organizational Performance

121

Table 3.1 Summary of Variables, Dimensions and Total Number of

Items

142

Table 3.2 Organizational Performance Measures 144

Table 3.3 Key Customer Focus Measures 146

Table 3.4 CRM Organization Measures 147

Table 3.5 Knowledge Management Measures 148

Table 3.6 Technology Based CRM Measures 149

Table 3.7 Top Management Measures 150

Table 3.8 Customer Orientation Measures 151

Table 3.9 Training Orientation Measures 152

Table 3.10 Customer Data Measures 153

Table 3.11 Customer-Information Processing Measures 154

Table 3.12 Integration of CRM Measures 155

Table 3.13 Reasons of not Using CRM 156

Table 3.14 CRM Tools 157

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Table 3.15 Summary of the Variables Measures 158

Table 3.16 Number of Selected Hotels ineach Category 161

Table 3.17 Reliability Coefficient for Multiple Items in Pilot Study

(n=30)

163

Table 4.1 Background Information of the Responding Hotels 172

Table 4.2 The Reasons of not Using CRM 173

Table 4.3 CRM Tools 175

Table 4.4 Factor Analysis on Organizational Performance 178

Table 4.5 Factor and Reliability Analysis on CRM Performance 180

Table 4.6 Factor and Reliability Analysis on Organizational Factors 183

Table 4.7 Factor and Reliability Analysis on Technology Factors 187

Table 4.8 Comparing Original Dimensions with Final Dimensions after

Factor Analysis

190

Table 4.9 Reliability Coefficients for the Variables in the Study 191

Table 4.10 Descriptive Statistics for Dimension of Variables 192

Table 4.11 Customer Relationship Management Performance by Years

in Operation, Annual Income, Number of Employees and

Hotels Categories (n=98)

193

Table 4.12 Pearson Correlations of Study Variables 195

Table 4.13 Summary of Multiple Regression Analysis for Factors

Influencing Customer Relationship Management

Performance (n=95)

199

Table 4.14 Summary of Multiple Regression Analysis on the Impact of

CRM Performance on Organization Performance (n=98)

200

Table 4.15 Summary of Hypotheses Testing Results 201

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LIST OF FIGURE

Figure no. Title of Figure Page

Figure 2.1 Theoretical Framework 122

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LIST OF APPENDICES

Appendix no Title of appendix Pages

Appendix A Questionnaire 258

Appendix B Factor Analysis 267

Appendix C Reliability 340

Appendix D Hotels Profile 345

Appendix F Regression Analysis 353

Appendix G Partial Plots 356

Appendix H Scatter Plots 360

Appendix I Normal Probability Plot 362

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LIST OF ABBREVIATIONS

CRM : Customer Relationship Management

CS: Customer Service

E-CRM: E-CRM Electronic Customer Relationship Management

ERP : Enterprise Resource Planning

FS Field Service

MA: Marketing Automation

M-CRM: Mobile CRM

POS Point-of-Sale

SCM Supply Chain Management

SFA Sales Force Automation

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CHAPTER ONE

INTRODUCTION

1.1 Introduction

This chapter presents a summary of the background of study, statement of problem,

objectives of study, research questions, and definition of the key terms. These are

followed by a discussion on the contribution of this study. Finally, this chapter ends

with a discussion on the organization of the remaining chapters.

1.2 Background of the Study

Jordan is a small (population of six million), landlocked, country with few natural

resources. It depends on external sources for the majority of its energy requirements,

unlike some of its neighbors. The country is potentially highly vulnerable to external

shocks, given its size and natural resource endowment. Despite this fact Jordan ranks

well on the Global Competitiveness Index; in 2008 it was ranked 46 out of the 134

countries (Fischer et al., 2009).

International tourism continues to develop worldwide, with the Middle East

among the fastest growing regions. Tourism is a key driver of Jordan’s economy;

currently it is the single largest employer. Jordan is one of the few countries in the

Middle East to witness annual growth in the tourism industry. With its regional

spread, tourism is an ideal industry to diffuse benefits across Jordan, and during the

past few years, tourism has been responsible for generating a significant increase in

foreign and domestic investment (Aldehayyat, 2011).

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The contents of

the thesis is for

internal user

only

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321

Abbott, J., Stone, M., & Buttle, F. (2001a). Customer Relationship Management

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Customer Relationship Management Strategy: An Empirical Study. The

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